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FAQs

When a commercial Tenant defaults in the payment of rent, how does the Landlord recoup payment?

The Landlord can proceed in one of two ways. If it wishes to continue the tenancy and it considers that the Tenant owns valuable goods in the leased premises (against which the Landlord has not previously postponed in favour of another secured party), it may wish to levy a distress. This means that the Landlord enters the premises, takes control, changes the locks and seizes the goods for sale. The terms of the lease must be carefully reviewed to determine the proper notice provisions, without which the Tenant is entitled to 15 days’ notice. In order to effect a proper distress, the Landlord must be careful not to terminate the lease and must allow the Tenant continued access to the premises. Subject to certain limitations or the bankruptcy of the Tenant, the Landlord may sell the goods and retain the funds to help offset the rent owed. Alternatively, if the Landlord considers that the Tenant’s goods are not worth selling and wishes to terminate the lease, it may evict the Tenant by serving a notice of forfeiture to the Tenant with a reasonable amount of time for it to vacate the unit (determined by the lease). The locks may be changed so that the Landlord takes control. The Landlord must allow the Tenant access to remove its belongings. Even if the Tenant has defaulted, however, the Tenant may be able to apply to the court to obtain relief from forfeiture and prevent the eviction if it pays the overdue rent in a timely manner, in which case the lease would be reinstated. If the Landlord does evict the Tenant, it must try to mitigate its damages by re-leasing the premises to another interested party, although it may still commence an action against the Tenant for the rent owed and its costs of termination. These remedies should be carefully undertaken with advice from your lawyer so that they are exercised properly at law.

© 2015 Lawrence, Lawrence, Stevenson LLP

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43 Queen Street West, Brampton, ON, Canada L6Y 1L9
Telephone: 905.451.3040 Fax: 905.451.5058 Email: lls@lawrences.com

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